The dictum of Milton Friedman, to the effect that the only social responsibility of a business corporation is to enrich its shareholders, wants some serious thought. It would seem to rest on a foundation of legal positivism: the business corporation is an artifact of human law, dedicated to a single purpose. To assign new and competing purposes is to misunderstand the artifact. The business executive who operates on this misunderstanding in effect has committed fraud. He has diverted resources entrusted to him to illegitimate purposes.
The error in this formulation, as I see it, lies precisely in its foundation of legal positivism. Do we acknowledge that business activity is native to man, at least in the sense that it is prior to any particular arrangement established by positive law? If so, then I think we are perforce acknowledging that business is to some degree entangled with the ends of man as such. Striving for consistency, we should go on and say that, whatever the particulars of the positive law governing business in a given society, the human activity of business is a deeper matter of human flourishing and positive law may take a wide variety of forms in instantiating it. We might even say that business activity rightly understood partakes of the great charter delivered by God to man, to be fruitful, multiply and fill the earth. In this light no stricture of positive law or ideological abbreviation can reduce business to purely a matter of shareholder wealth. Our business corporation may be an artifact of positive law; but business as such is inextricably tied up in nature and destiny man.
Even if that ontological argument fails to satisfy, the inherent weakness of legal positivism is evident. It is doubtful, for instance, that defenders of Friedman would allow a simple revision in corporate law permitting social purposes in business governance to dispose of their argument. In other words their claims concerning the character of the business corporation go beyond the particulars of positive law.
Here we touch on a common vulnerability of libertarian thought: the allergy to metaphysics often masks strong metaphysical claims. The libertarian view of private enterprise rests on philosophical assertions about the nature of human beings and the nature of political society. Fair enough. The trouble begins with the reluctance of libertarians to integrate these assertions into a rational picture of reality. The claim that governments are forbidden to interfere in private enterprise except in the pursuit of a few expressly-limited purposes, is really a claim about nature of the creature called man and the societies he builds. To defend it one must repair to deeper arguments of teleology: who is man? What is his purpose? From what does political authority derive and what are its limits?
Put another way, the libertarian is often tempted to rely on certain very common sophistries to quarantine his favored field of economics from the wider realm of political philosophy and above all metaphysics. In fact there is no economy that is not also political economy, and neither politics nor metaphysics can be disposed of when answering such questions as, What is the social responsibility of a business corporation?